The Managing Director/Chief Executive, Mainstreet Microfinance Bank Limited, Mr. Adegoke Adegbami, has said Microfinance banks need stable funds from multiple sources to thrive in the country.
While speaking on the challenges of Microfinance Banks and the factors responsible for non-performing loans, Adegoke said: “There are no bad followers but bad leaders.” So you need to do your assignment before you pass your money to your customers. We talk about policies relating to risk and the types of policy we have are policies that tell us to begin and end a loan. There are businesses we can do and not do. The things we look out for are, cash flow of the person, the integrity of the person and sustainability. Once the customer has met all the conditions, we disburse the money’’.
He disclosed ‘’some bad loans results from connivance between fraudulent staff and some customers. So in actual fact, we don’t let the customer go and sleep, we monitor them. So the monitoring mechanism carried out by our Loan Recovery Officers is very alright because it is not just about loans, you do your assignment before disbursement, you monitor and make sure the money comes back as at when due because the main assets of the MFB are the risk assets and loans’’.
He reiterates, Microfinance needs stable funding both from private, commercial and development sources, adding that Poor credit culture in our society is also a major problem. ‘’I also think that microfinance in Nigeria is currently being strictly regulated compared with what obtains in many East, South African and Asian countries. We know that the regulators’ objective is in response to the nature of our own society. But we should get to a point were some small-scale microfinance can operate just like the modern forms of our typical Alajo or Esusu system’’.
He maintained that a moderate activity in running the MFB should be guided by other business related parts of the law pending when they will grow to the level of strict regulation. Adding that lack of public infrastructure makes the business of microfinance to be very expensive.
